Jason Fried on valuations, Basecamp, and why he’s no longer poking the world in the eye

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com. It is, of course, home of the ambitious upstart.

Joining me today is a guest who’s been on Mixergy many, many times and someone who’s influenced the design and development of so many web apps and now mobile apps. His name is Jason Fried. He is the cofounder of Basecamp, which is a web and mobile-based project management software and collaboration tool. It does to-dos, files, messages, scheduling and milestones and so much more.

I invited him here, frankly, to talk about lots of different topics and see where the conversation goes. I want to catch up a little bit about the name change. Last time he was here, the company was called 37signals. How was changing the whole name, this name that they invested so much reputation and brand connection with? How did it go when they changed their company name to Basecamp? I want to find out about the transition from one of their pieces of software to someone else running it. I want to talk about why I don’t see him blogging as much and so much more.

This interview is sponsored by the company that will help organize your books. It’s called Bench. You can find it at Bench.co/Mixergy. I’ll tell you more about them later. And it’s sponsored by the company that will help host your website better than you’ve ever had it hosted before. I’ll tell you why you should go check out HostGator.com/Mixergy later.

But first, Jason, welcome.

Jason: Hey, how are you, Andrew?

Andrew: Hey, so, before we started, I told you that a few years ago, I read this post by you. This was September 24th, 2010, where you basically put a dollar bill on the wall with a post-it note that says equal to a fraction of one percent of the company. As a result of somebody investing this money in the business, now 37signals is worth $100 billion. Someone invested a buck to get a small share of it.

I felt like you were making fun of Facebook’s valuation at the time. The day before, your cofounder made fun of Facebook’s valuation being $33 billion. Today, Facebook is worth over $300 billion. Were you wrong?

Jason: Well, first of all, just to clear it up, David was the one who put the post up about Facebook’s valuation. That was his own personal opinion about that. I did put the other post up. I don’t know. What I do know is that valuations in general–Facebook is a great example of a wonderful company that has proven over time now to be profitable, to be a growing company and to be a true juggernaut.

They are the vast exception to the rule in terms of crazy number valuations. Very few companies today that exist have turned out like Facebook. So, our general feeling about valuations is that most of them are absurd. For companies that don’t have any revenues or any profits.

The whole post, the fake press release was just about how someone puts in money in the company and they value it somewhere. It has nothing to do with profits. It has nothing to do with revenue. It has to do with what someone else thinks it’s worth. In my opinion, it goes against a lot of basic economics. We were just trying to jab at that in general by saying someone bought–it was 0.000000001 for $1, which would equal $100 billion. So, if someone did that, then we’d be worth $100 billion, which is also ridiculous. So, that was the idea behind that.

What was interesting though was I posted that in, I think, 2010. I just reposted that on Medium. We moved our blog to Medium. I just posted that maybe about a month ago. It was the number one post on Medium. It’s been seen now, I think, 240,000 reads or something like that. One of the most popular posts ever posted, again, even though it was like six years later.

The point is that it’s still ridiculous today, as ridiculous as it was in 2010. I think people resonate with how ridiculous a lot of these valuations actually are.

Andrew: I didn’t notice that you put it up on Medium. I did, of course, see that you guys moved your blog to Medium. What I have noticed is that in addition to shaking things up with that post, you used to write posts like “Another Generation Bends Over.” That was the headline of the post that you wrote when Mint sold itself for a price that you thought was maybe too small, but definitely at a time that you thought was too early.

You used to do this stuff all the time–poke the world in the eye to get attention for your point of view and also for your company. I’m wondering why that’s not happening anymore.

Jason: Yeah. I think we’re taking different positions now that are hopefully more or less–I’ve mellowed, personally. I don’t enjoy poking people anymore or poking other companies. I’d rather poke ideas. So, we’re still doing that. I’m actually going to be post something probably tomorrow or the next day, a really long article I’ve been working on for about a month on the downsides of group chat as a primary method of communication for organizations.

We take very strong opinions about ideas and methods and far less so, at least me personally, far less so against someone else. I’ve gotten over trying to be against anybody.

Andrew: Why?

Jason: I don’t find it interesting. I don’t find it flattering. I don’t think I need to do that. It’s just not for me. I’m 41 now. I just feel like I’ve grown up a bit and I’m not as brash when it comes to other people’s stuff. I’d rather take points of view I believe in that are constructive versus more critical, basically.

Andrew: Is it also what Howard Stern used to say about how if you want to get attention and build a reputation, you fight up, not down. So, you fight against people who are bigger names than you and that’s how you get attention for yourself. If you fight against people that are smaller, then you give them attention. You’re now at a place where you’re at the upside of your career. You’re no longer battling Microsoft’s project management software. You’re the leader. Is that it too?

Jason: I don’t think of it that way necessarily. I just don’t like to pick on people. I think I may have liked to pick on people a little bit more before.

Andrew: Is it because you fell in love and married?

Jason: Maybe. And I have a kid now and all things. That could be part of it. I also wrote a post a few years ago called “Give It Five Minutes,” which is another–I also republished on Medium. I also became the number one post on Medium, which is this idea that I was at a conference a few years ago. Maybe it was like six years ago now, something like that. I was listening to someone speak on stage.

In my head, the whole time I’m formulating why this person is wrong. I’m just like, “They’re wrong. They’re wrong. They’re wrong.” The guy gets off stage. I go up to him and introduce myself and I just like go at him. He’s like, “Dude, give it five minutes, man.” I’m like, “What do you mean?” By the way, this was Richard Saul Wurman, the guy who founded TED and who’s like a famous graphic designer. Who in the hell am I to tell this guy he’s wrong, but that was what was going through my head because that was the mindset I was in.

He’s like, “Look, man, you just heard me speak. There’s no way that you can form opinions that quickly. You don’t know yet. Things have to settle in. Maybe you’re right. Maybe you’re wrong. But if you just come at somebody after you’ve just heard them speak, then you haven’t listened. You haven’t absorbed. You have heard anything yet.”

That moment really changed me, actually. That was probably a defining moment that made me think, “You know what? I shouldn’t push back on other people’s ideas, necessarily. Let me just put mine forward and put my stuff out there, what I think and what I believe versus me trying to knock someone down.” It was a formative moment for me. Ever since then, I don’t post anything negative on Twitter. I just don’t like being snarky or short with people. I just don’t see the reason for it.

Also, I think ultimately it reflects negatively on me if I was to go out and just rip on people. Maybe in my 20s, I was into that. But I don’t want to be that way anymore.

Andrew: I feel like it was good marketing too for a long time. I’m wondering what your current marketing is. Where are you getting new users for Basecamp?

Jason: Our marketing has always been word of mouth and teaching and learning and sharing. We still do a whole lot of that. It’s just not as aggressive.

Andrew: Where do you do the teaching now?

Jason: We do it in our office sometimes. We’ve written a few books. Our most recent book came out a few years ago called “Remote.” We’re probably going to be working on maybe another book next year.

Andrew: That’s a couple of years and then another one coming out maybe next year. That puts it even further. That can’t be the primary channel for marketing for you guys now, is it?

Jason: No. Our primary channel for marketing is our customers telling other people about Basecamp.

Andrew: That’s it? It’s not even ad buys?

Jason: We don’t spend any money on ads.

Andrew: Really, still?

Jason: Just last week, we publish this on our site, last week another thousand companies signed up for Basecamp 3 last week. We’re still getting depending on the week 10,000 to 12,000 new companies every single week signing up for Basecamp 3. It’s all word of mouth. It’s all brand recognition. It’s all people saying this thing works or trying it with another client and they’re like, “This thing works,” so, that’s where it’s all coming from.

Plus, we do still write on our blog. We do still talk. We’re vocal in different places in different ways, but it’s less aggressive, although, I want to start getting back into stronger positions, but not against other people, but for something. I think there’s a difference between a position against and a position for. I’d rather be taking positions for, which in effect is against something, but it’s not positioned that way. David is still very vocal in his own way about things. So, we have different personalities around that stuff.

Andrew: Yeah, I saw he recently posted an article about valuations that was pretty aggressive against the whole angel/venture capital system. I’m looking at SimilarWeb to see where you guys are getting your traffic. It does seem like 37signals.com, your blog, your URL is sending the majority of your inbound traffic. It’s the biggest current source by far of traffic, I should say.

Jason: The biggest source is direct, still, just people typing in Basecamp.com.

Andrew: Sorry, I guess I should say the biggest source of referral traffic. That’s huge.

Jason: By the way, that’s all old stories.

Andrew: Because the new stuff is on Medium.com.

Jason: So, we have a huge back catalogue of ideas. The thing people in this industry forget is people are always trying to think of new, new, new. A lot of things are new to people who have never seen it before. It could be six years old that we wrote something, but it’s brand new to somebody and still relevant. So, there’s a large, large back catalogue of thousands of articles we’ve written that are still generating a lot of traffic for us. But the majority of our traffic is still direct, people just typing in Basecamp.com and signing up.

Andrew: So, valuations shouldn’t be measured by how little someone gives you for a little share of your business. I’m wondering what number we should use to talk about how big Basecamp is. I was doing research myself to try to figure out how to show the audience how big it got. Yeah, I see on your homepage you say that 11,155 companies got started with Basecamp 3 last week, which is a huge number. I saw somewhere that millions of companies, I think, you say are using Basecamp. Is there a number that you can use that shows how big Basecamp is that gives me a solid grasp of what you built here?

Jason: No, not necessarily. I can give you like in general, as a company, we generate tens of millions of dollars in profits every year. We talk profits. I don’t talk revenue. To me revenue doesn’t mean anything. Profits mean something but it doesn’t mean that much. It’s really easy and a lot of companies in our industry puff their revenue numbers up and they’re losing money. That’s not a good, sound business in my opinion. We talk about profits. So, we generate tens of millions of dollars in annual profits. And we’ve been profitable every year since we started in 1999, profitable every single quarter and every single year since we started the business.

We take the business side of it very seriously and take profitability very seriously. We want to be a sustainable company and sustainable companies need to generate their own profits. You can’t keep waiting for people to infuse money into your business because they may not be around.

That’s why we say tens of millions in profits. But as far as value, I don’t know what we’re worth and I don’t care and I don’t think about it for more than a second. It doesn’t ever enter my mind. It doesn’t matter.

Andrew: Does it bother you that you have to pay taxes but someone else who’s building a company who has no profits–you see where I’m going–no profits, sells their company, has to pay, what, 15% in taxes? You have to pay closer to 50.

Jason: Yeah. That’s just the tax laws. There’s not much I can do about that. My grandfather always told me that tax day is a good day. If you’re paying taxes, then you’re making money. So, I don’t like my tax bill, but we’ve decided to just be honest about that. We’re an LLC, so we get distributions at the end of every year, whatever profits are left over, divide it amongst the members and we have to pay income tax on that.

It is irritating to see people being paid by stock options and all these other methods or they’re paying capital gains tax on that. But we could play that game. I don’t want to play that game. To me it’s actually slightly dishonest, even though it’s totally legal.

Andrew: To capital gains tax on a business?

Jason: Not capital gains tax, but just the idea of making sure your company makes no money, even though it takes in lots of money and makes no money so no one has to pay taxes yet, the executives are taking home millions of dollars in options and grants. It’s a way to play around the rules and it’s perfectly legal and many, many big companies do it. It’s not something that I feel comfortable with.

Andrew: In the old model, where 37signals was creating lots of different SaaS products, if you would have invested money from Basecamp into those other products, which it seems you were and then sold those businesses, then you would have gotten the 15% capital gains. Am I obsessed a little too much with that?

Jason: No. It is what it is. I am very happy. I’m doing very well. I’m financially independent.

Andrew: You don’t have this drive to always do more and more?

Jason: I don’t have a drive to squeeze every last penny.

Andrew: I see.

Jason: Certainly I’d much rather be paying 20% taxes than 49.6 or whatever the ultimately high end is, certainly. But that would require a variety of changes to the business. It would add a lot of complexity. To me, it’s not worth the added complexity for that gain. It just isn’t.

And we have sold things in the past. So we sold Sortfolio, which was one of our products. We tried to sell Highrise. We didn’t end up selling it. We spun it off, which we can talk about separately. But there are a variety of ways to do this. I’m not a maximizer in that way.

Andrew: Where do you maximize, then?

Jason: I try to maximize my attention and my interests. So, I’m working on things that I care about and I like with people I like and maximize the environment, try and create the best possible environment to work in and to work at. That’s what’s interesting to me.

Andrew: Give me an example of how you’re doing that for your environment right now.

Jason: Specifically for the company and employees?

Andrew: Anything. I want to see when you direct your energy completely focused, what do you direct it towards and what happens to that thing you direct your attention at?

Jason: A good example of this is we just recently hired a COO. So, before, David and I ran the company ourselves for many years and we still do. We hired a COO to help relieve us of a lot of the day to day operations. She’s only been with us for a few months, so it will take some time for her to really get up to speed on that and to provide additional perspective and leadership here.

But the idea there is to get back to what we really love doing, which is focusing on product development and strategic thinking around product development. So, a lot of my efforts right now are trying to figure out how I can not do the things that I’m either not good at or just simply don’t enjoy doing.

Andrew: Like?

Jason: I don’t like day to day operations of things. I don’t necessarily like running a company. I do it. I have done it. But I don’t think I’m actually particularly great at running the company. I like helping us head in different directions. I love the design process and helping us build the product and design the product and think through the product and think strategically.

I love those things, so I’m trying to remove myself from doing all the other stuff, which anyone who runs a business knows there’s just a bunch of other stuff.

Andrew: Is there one that especially bothered you?

Jason: No. It’s not anything in particular. It’s just a lot of responsibility. It sort of sucks away focus and the ability to like–if I have to go to work every day and know I’ve got to spend three to four hours on just stuff… For example, the city of Chicago just passed a new tax law that says that Chicago-based companies need to tax Chicago-based customers who used software as a service products.

Andrew: Oh, that’s such a headache.

Jason: Headache, right? Now there’s like a seven or eight or nine percent tax that we have to apply to Chicago-based companies. So, just that whole process of learning about the ruling, talking to our attorneys, talking to our accountants, figuring out how to do it, figuring out how to announce it–all that stuff, Mercedes, who’s our COO, she took on a lot of that burden.

The same thing happened in the state of Washington. Washington passed some new tax. We have an employee now who lives in Washington. So, we have a different tax base rule because we have a nexus there technically. So, just going through all that stuff and talking to the attorneys and talking to the lawyers, that’s stuff that I would do before, David and I would both do. We’re trying to not do that stuff.

Andrew: Before you made millions in profits every year, was there something that you said, “I’m not going to do this because I’m not passionate about it and this takes me away from my passion,” and then you hired someone else to do it? I want to see how this mindset worked back before you were as big as you are today.

Jason: It was different because we had fewer people. When you had fewer people, you had fewer concerns. Also, there were fewer people and fewer laws and fewer concerns. It was just simpler. It was just like five years ago, six or seven years ago, just a simpler time. Now we have about 50 people in the company, which is still relatively small, all things considered. But when you have 50 people, you have 50 personalities, you have 50 human beings and there are other things that come up that you have to deal with when you have a staff of that size.

So, helping to run the company as well as we build our products is sort of the goal of bringing on the COO. I want the company to run very smoothly just like I believe the products run very smoothly. David and I can’t do both of those things at once and give them their full attention. So, it’s a matter of figuring out some of the things we can offload, also some of the things that Mercedes can bring. She has a background at a variety of other companies. So, she’s seen how companies can run more efficiently as they get larger, things we don’t know how to do.

So, trying to do that–I don’t like knowing that my day is full of stuff. Talking to lawyers and thinking through that stuff. It’s very rare that stuff comes up, but when it does, it’s a major disruption for me. I don’t like to deal with it.

Like this morning, Ryan and I–Ryan is one of the designers here–we sat down a talked with a new design intern here about this really interesting new idea around how to structure work in Basecamp, in the product, how to organize work. We’ve always done it with to-dos in Basecamp. But we have this new idea we wanted to explore.

I just get so excited about that hour or two where we can sit down and talk about the product and sketch things out and think things through. I’m trying to make more of my eight hours that versus like half of my eight hours that.

Andrew: I get that.

Jason: In the big picture–obviously, I need to get involved in other things, but I’d like to be more towards that ideal world, where I’m mostly focused on product and strategy and writing and thinking and also getting out there and speaking more and getting out there. We took about a year off from doing that.

Andrew: I’ve noticed that you were back speaking. Let me do a quick commercial break here and then come back and ask you about your management philosophy and how you’re building the company the way that you like to build your products.

Actually, it’s so great that this is the sponsor. The company is called Bench. The reason that it’s great is because Bench takes away from entrepreneurs and businesses a lot of the stuff that distracts us from our business, the accounting. I know for myself here at Mixergy, just keeping track of al the payments you get from strip, from PayPal, it just becomes a pain.

I can see how for entrepreneurs, frankly, even for me back in the early days, it was constantly weight on my head, “If I get this wrong, I’ve screwed up my understanding of where the business is and I may be spending more money than I should and we’ll lose money.” If I don’t get on this every single week and every single year, then at the end of the year I might be late with my taxes and not need to do them at all. It’s such a weight.

That’s why Bench will do it for you. If you’re out there listening to me and your books aren’t in order. Give them to Bench. Let Bench manage the whole thing. That’s what they do. It’s not just software. It’s software and people designed to make sure that your numbers add up and that everything is organized for you so you know how much money you’ve made last week, so you know how much money you’ve spent that goes into your business.

If you haven’t yet checked them out, you should go to Bench.co/Mixergy. When you do that, they’ll give you I think it’s a 20% discount for a limited time. That’s why I urge you to check them out right now, Bench.co/Mixergy, 20% discount for six months. That’s what they’re offering. When you do, let me know how well it works for you. Thank you Bench for sponsoring.

Jason, I always loved how you were so clear about your philosophy about product development, back even before people understood what SaaS was. You said make decisions for people. Don’t drown them in infinite options. It’s okay that your software won’t work when the web goes down because how often does the web go down. Make it into a web-based app. I’m wondering if you have the same set of philosophical points for management now that you’re trying to think about it more.

Jason: Yeah. The guiding principle for me is to build a company that I want to work at. It’s how I’ve always felt. If I was an employee, would I want to work here? If I was an employee what’s wrong about this place that I’d like to fix or whatever?

So, it’s always about creating an environment where people could do the best work of their lives and creating a company that I’d want to work at myself. That extends all the way to the freedom we give people, the autonomy we give people to the benefits we offer. I think we offer the best benefits in the world, frankly. I wrote a really big post on that on Medium. I don’t know if you saw that.

Andrew: I saw that. You’ll give people $100 a month for any exercise they want, whether it’s a gym or new sneakers. You’ll pay for their massages. They should feel comfortable. The whole thing just goes on and on.

Jason: We pay for fresh fruits and vegetables at home for people. We pay for people’s vacations. We don’t just give them vacation time. We pay for their vacation time.

Andrew: Sabbaticals after three years?

Jason: A sabbatical after three years, 30-day sabbatical after to three years, a lot of those things. We didn’t start that way. Some people are like, “It’s unfair that you posted this because I’m a new company and everyone is going to expect this from me as well.” We didn’t start this way. It took us ten years to get to that level where you can offer these things, but it’s to creating a workplace that’s calm and peaceful, as calm and peaceful as possible where we don’t make people pull all-nighters.

We don’t expect more than 40 hours a week out of people. We don’t create crazy deadlines that can’t be met. All those things, I wouldn’t want to be in an environment where things that didn’t get done this week mean you’ve got to work until 10:00 p.m. on Friday. I don’t want to be that person or work in that place.

So, all those decisions add up to the kind of environment we want to create. Fundamentally it’s about trusting people and it’s about giving people flexibility and the freedom to prove that they’re great and to help them get great, help them be great and treat everybody with fairness and reason and kindness and assume people are going to do the right thing versus do the wrong thing.

A lot of companies have a lot of policies preventing people from doing the wrong thing. Our point of view is fewer policies. Assume people are going to do the right thing. If they do something wrong, we talk to them about it and make sure they don’t do it again versus like putting policies in place to prevent that from ever happening again.

We consider policies to be organizational scar tissue that every time there’s one little tiny cut, you’ve got a scar now. You’ve got lots of scars, it stiffens you up, makes it harder to move, makes it less flexible. So, just being reasonable and fair is kind of the fundamentals.

Andrew: I was talking with Gary Vaynerchuk the other day and I was asking how he gets everyone at his company to understand how he thinks about social media, how he thinks about marketing. You’re smiling as I say that. What’s making you smile about Gary?

Jason: I always smile about Gary. I like Gary.

Andrew: He said that he just sends out memos, I think he calls them even though they’re probably just sent by email to just tell people what his thinking is about different software all the time. That’s how he infuses his philosophy into them and into his company. Do you do anything like that?

Jason: Occasionally we send out things on Basecamp that are sort of company-wide pillars or philosophies or things we’re thinking about. But what we actually try to do is we actually just not try to send that internally. We try to put over the externally too. So, our blog posts are meant for internal consumption as well as they’re meant for public consumption. If we’re going to say something out loud internally, let’s say it externally as well almost all the time. There are some personal things that we keep inside. For the most part, that’s what we do.

Something I’ve been thinking about starting, every other Friday is just a brain dump of what’s on my mind. I’ve been inspired–do you remember how Larry King used to write these columns I think for USA Today, just like these non-sequiturs, silly things that didn’t make any sense.

Andrew: “Oreos are great… When you interview someone, you should say hello to them first…”

Jason: That stuff. I’ve always loved that. I thought that was such a cool thing. I’m thinking about doing that. I have all these half-baked, half-formed ideas. I don’t feel like they need to be fully formed to be valuable. I’d like people to know what’s on my mind.

Typically what I’ve done in the past is I wait until the thought it fully formed and I write up something official and sharing. I’m starting to think it might be better to share half-thoughts and quarter-thoughts, almost like music, like quarter-notes and eighth-notes, little things I can share that might lead to a deeper discussion. I might find out what people are interested in. I’m thinking about doing that every other week, maybe once a week.

Andrew: In a public blog post?

Jason: I was thinking of starting last week, but I didn’t. Maybe this Friday I’ll do that.

Andrew: In a public blog post or internally on Basecamp?

Jason: I was going to start internally because they’re a little bit more like internal strategic decisions, things like here’s somewhere–I think Basecamp should be more peaceful, random things. But I might end up sharing them externally. I’m going to see sort of how it goes. It’s kind of like you can look at your own company sort of as if you’re a standup comedian, before you go do the hour-long HBO special, you go travel to clubs and you try out your material to smaller audiences.

So, I might try that out internally and see how it goes and then might decide to public it publicly. But I really think that model–and I don’t know if Larry King is still doing that–but when he used to do it, I used to always enjoy reading it. I found it dynamic and interesting. There was always something in there that would spark something in my mind. So, I want to do that.

Andrew: I get that. What part of Basecamp would you use for that?

Jason: Well, I’d post a message. So, I would go to one of the message boards. We have a Basecamp setup–one of our Basecamps is called All Basecamps, which is confusing because it’s our company name and the name of the product, but consider it 37signals Central if we were called 37signals. It’s basically our internet.

We use Basecamp as our internet. So, the message board inside Basecamp is where we go to post company-wide announcements, policy updates, philosophy, suggestions, vision decisions, whatever these things might be. So, I go on the message board and do a weekly posting on that.

Andrew: Why is there a Basecamp 3 and a Basecamp 2 and a Basecamp 1? If it’s software that’s online, why not do what other software developers do, which is just keep updating the software? No need to number it anymore the way we used to when it was all desktop software.

Jason: I think it goes deeper than that, which is you can constantly iterate on something–first of all, we’ve been doing this for 12 years, so we’ve been at it longer than most. At a certain point, you reach what’s called a local maximum. You’ve sort of optimized it the best you can and to take big leaps, you can’t take big leaps on an old platform at a certain point. There are new ideas you have, there’s new technology that’s available. There are new thoughts and concepts.

Andrew: Why not just move everyone over to the new one?

Jason: Because that’s how software companies think. We don’t make software for software companies. We make software for people. People don’t want to be forced to do things. So, one of the things that’s very interesting is that the software industry believes that new is better. A lot of our customers believe that consistency is better, predictability is better, continuity is better. They’ve invested the time to train their staff on a certain product, they’ve created their own workflows. They may have trained their clients on how to use something.

People are always in the middle of something. In the worst time to change the furniture around and change everything on them is right in the middle of something and after they’ve already invested in teaching people how to use something. So, we’ve always believed and were unique in this that no one should ever be forced to change major versions of Basecamp.

So, Basecamp 1, which was called classic, now it’s called Basecamp 1 will always be around as long as we’re around as a company. Basecamp 2 will always be around as long as we’re around as a company and Basecamp 3 will and one day when we do Basecamp 4, Basecamp 3 will always be around and Basecamp 4.

The point is that people can choose to stay where they are if they’re comfortable with it, if it does exactly what they need, if their workflow is built around it–people build their entire companies on Basecamp. They have a workflow. It’s very disruptive for them to get a new feature or have some changes when it doesn’t mean just they get a new thing or two, but now they’ve got 50 people they have to change over to this new system, which is radically different than the previous one.

Andrew: I wish other software did that for me, like Skype, for example. I’m using an older version of Skype, as old as I can because when I update, it potentially breaks some other software that I use to record an interview. So, I now have a computer that has software that’s out of date just so nothing else breaks and I know that for sure our interview will be recorded.

The problem with that is that if someone wants to message me and do a group Skype chat with me, I can’t do it on this computer because I’ve got an older version of Skype. So, it creates this lack of understanding with software. I can’t just say I have Skype. I have to say I have Skype, but I have an older version. I can switch to my other computer if we want to do group. Do you find that that becomes an issue for you too?

Jason: I’m sure it’s an issue at some level. Some people have some things–they’re working with a new client on Basecamp 3 and they’re working with Basecamp 2, so they have to sort of straddle the two worlds. The thing we have to remember is that everything is a tradeoff. Everything is a sacrifice.

You could say we could eliminate that problem, but what problems are we creating? If someone had to move off 2 completely to go to 3 because we wanted them to… It doesn’t matter what I want you to do. It’s what do you want to do. If you want to move to 3, we’d love to have you move to 3, but if you want to stay on 2, I’m perfectly happy having you as a customer on 2. If you want to use both, that’s fine too.

Everything has its tradeoffs and its costs. For you it would be nice to always be on the latest Skype. But it would break some fundamental things in your business, which are more important to you than being able to group chat with somebody. So, it’s like what’s more important to you? That’s what’s going to anchor you to a certain thing.

Andrew: I guess I’m surprised because you are such a minimalist when it comes to design that I can easily see you saying, “We’re on to 3, that means classic number 1 is gone. We’ll give you a year to migrate,” and it’s just not the way you want to do it.

Jason: To me it’s super disrespectful to do it that way. The software industry loves to do that. The software industry in general thinks it’s great. It thinks everything it does is better and better and better and that’s what matters. It doesn’t’ matter. We have a double digit percentage of our customers still on Basecamp 1. It’s probably 12 years old and it hasn’t changed.

Whenever we move to new version, we don’t change the old versions anymore, we just maintain them. But we don’t update them. So, Basecamp 1 is the same as it was in 2012 and it will never change. A double-digit percentage of our customers remain on it. Maybe one day they’ll switch to another person, maybe they won’t. Don’t care. I just want them to be happy.

Andrew: Does it work with the mobile app, Basecamp 1?

Jason: There are different mobile apps for all three.

Andrew: I love Basecamp 3 best by far.

Jason: Oh, thank you. Go ahead. Sorry. I shouldn’t stop you when you’re saying good things.

Andrew: I love how you added a lot of… It’s really useful, but everything is simple and clear. So, there are not tabs at the top, but there are links at the top to different sections I want, like chat and to-do lists, but you don’t even have the copyright at the bottom of the page. You don’t have anything like, “Code is art,” on the bottom of the page. It’s so distraction-free.

Jason: That hopefully is a representation of how we want to be as a company. I want our company philosophy to make its way into the product as well. I think people look for a way to work. When they buy a product, they’re not just buying a product. They’re looking for guidance. How can we work better as a company or how can we work better as a team or as a group? I think that helping people bring some more calm to their work is great. Basecamp 3 does more things that any Basecamp before. It’s the most ambitious version of Basecamp we’ve ever built. It’s basically like having six products in one.

But we’ve tried to make everything as straightforward as we possibly can. There’s still room to make things even more straightforward. But again, if you’re a Basecamp 2 customer and you love Basecamp 2, love Basecamp 2, man. We’re here for you. We’ll treat you the same exact way. We’ll never send you an email forcing you or even encouraging you to switch–totally up to you. That’s how we believe it should be.

It’s a little bit more like the car industry. So, the Porsche 911 has been around for 50 years. Over the 50 years, there have been seven different platform iterations of the 911. It’s still the 911 in spirit. The engine is in the back. It still has the same shape. It’s still a four-seater but the back seats are small. It has the spirit of the 911 even though–if you put an original 911 next to a new 911, you’d still see they’re similar but they couldn’t be more different as well–technology-wise, platform-wise, interior, performance, handling. All those things are different.

We want Basecamp to be a recognizable bundle of tools that we believe every group needs to do work together. Yet, the bundle might change a little bit but the core bundle will remain the same. We might add some stuff on the outside. We might improve the way certain things work. But that’s the philosophy behind Basecamp, that it’s a bundle of things.

We’ve basically seen over the past 12 years or so that there are about six things that no matter what kind of group you are, you need to work together. So, Basecamp 3 is built around those six things. It’s the only product in the world that’s build around those six things specifically.

Andrew: Documents, chatting, to-do lists… What are the other three?

Jason: Messages. So, there are basically six things. Rather than describe the things, I’ll describe the things that they do. So, every team needs a way to hash things out quickly from time to time. That’s what chat is really good at. So, we have that built into Basecamp 3.

Every team needs a way to make formal, official announcements, put together a pitch, put together a long-form something where people can take the time to consider it, to read it, absorb it and respond over time. That’s what the message board is for. Groups need a way to organize and divvy up the work that needs be done. So, that’s what to-dos are for.

Andrew: If I’m looking at this monitor it’s because I’ve got Basecamp on this monitor.

Jason: Cool. Every project, every group has artifacts of some sort. There’s a Google Doc or a spreadsheet or a PDF or image files or whatever, deliverables. There are like files or self-contained things. You need to keep track of that stuff. You can now put those things in folders and keep them nice and neat and organized in Basecamp 3.

Schedule, like deadlines and milestones–what’s due when? When is this whole project up? You need that. So, we have the schedule in Basecamp.

The sixth tool we’ve added is a brand new tool that we’ve been using manually internally but we’ve added it to Basecamp. It’s called automatic check-ins. We’ve realized that teams need to check in with each other on a regular basis. But when people ask each other questions all the time, it feels like nagging. But when a system asks a question on a regular basis, it’s not nagging it’s a system asking you questions.

So, you can set Basecamp 3 to ask your team every Monday morning, “What do you plan on working on this week?” or, “Are you blocked in anything?” Or at the end of every day, we have Basecamp setup to ask our whole team, “What did you work on today?” So, people write up what they worked on today.

This information is then published back into the Basecamp and then opens up for discussion so people can discuss it and then there’s a log of that. So, checking in with people, hearing back from your team, getting stuff out of people’s minds and servicing stuff is a really valuable piece as well.

Andrew: I hate to say it, but I didn’t know this stuff was in Basecamp 3 before I started researching you for this interview because a lot of conversation right not in tech software is about Slack, it’s about Asana. It’s about these other newer companies.

Jason: Yeah.

Andrew: Why do you think?

Jason: Why do I think it’s about those companies?

Andrew: Yeah, why do you think they’re getting so much attention where before you used to get that attention?

Jason: Well, I think it’s only natural that new things get attention. I don’t think there’s anything unusual about that. At the same time, we’re signing up 11,000 new companies a week. We may not be in the tech news, but we’re in the news. We’re in the know. People know who we are and people know what the product is all about.

So, I’m not that interested in being in tech headlines. I think new companies are more in tech headlines. So, I think it’s totally natural. They’re also both very good products and that’s fair game too. I think in general the first three letters of news is new. New makes news. So, if you’re a company that’s been around for a year, you’re going to get more news than a company that’s been around for 16 years. We’ve been at this for 15 years now–actually 16 years. So, that’s totally natural and it’s totally fine. I don’t really have any other answer to that.

Andrew: Okay. Let me talk about HostGator and then come back and I want to ask you about why didn’t this work, this whole philosophy on other products that you created.

The sponsorship message is for a company called HostGator. If you’re looking to build a website or you just don’t like the hosting company that you’re with right now, you should know that you can setup your site on HostGator. Whatever site you want to build–it can be a blog, it can be a shopping site. It can be anything. HostGator will manage it for you will run it for you beautifully.

The beauty of taking software like WordPress and putting it on HostGator is if I’m wrong and a year from now you say, “Andrew is a jerk and he lied to me,” you can just take your site and move it somewhere else, just like if you don’t like your current hosing company, you don’t have to put up with them. You can take your site and move it somewhere else. HostGator will be happy to do the migration for you if you’re with WordPress, make it super easy.

All you have to do is go to HostGator.com/Mixergy. When you go there, they will give you a deep discount to get you started and they will show you 24/7, 365 or this year 366 days a year support. That’s how good they are. Hey, Jason, let me ask you this one question. If you had to start over with nothing but a hosting account, what business would you build today, 2016?

Jason: Starting over with a hosting account… I would build Basecamp again.

Andrew: You would build project management? Are you a coder? You’re not a coder.

Jason: I’m not a coder.

Andrew: So if you have no money and you have nothing but a hosting package, how do you get to a place where you can eventually create a Basecamp brand new?

Jason: Well, it depends what your motivations are. So, a long time ago, I wanted–maybe I’ve talked about this–I wanted a software to organize my music collection. I looked around, couldn’t find anything I liked, so I learned FileMaker Pro. Another time, I wanted a way to organize my book collection. So, I learned PHP and I made a book organizing tool, which is what introduced me ultimately to David. I was confused in how to do something in PHP and I posted about it and David responded. So, that’s how I met David.

So, the point is like you’ve just got to start. If you care enough about it, you’ll be motivated to learn. If you don’t care enough about it, then you won’t. I think a lot of people that I’ve been lately at conferences and stuff, everyone is looking for someone else to do the work. It’s like, “I’m looking for a cofounder. I’m looking for this. I’m looking for that.” It’s like why don’t you spend the time learning the thing yourself as best you can.

But you don’t necessarily need to be the best on day one. You can start to build something and see if this thing that you’re building works. It’s never been easier to build these things. If I didn’t know anything and I wanted something to exist that didn’t exist, I would figure out how to try and make that myself.

Once I would bump into my limits, then I would either try to bump through them or I would find someone else who could help me from that point on. I feel like there are a lot of people just looking around for other people to do the work for them. I feel like they’re missing out on the experience of trying to make something themselves, which is a really wonderful experience.

Andrew: That’s really good experience. There’s a guy named Ed Riffle in the audience who heard me talk about HostGator and he did not know how to create his own website. He did not know how to code. He didn’t know any of this, but he said, “All right, I’m going to give this a shot. Let’s see what happens.” He went to HostGator, created his account. He installed WordPress because he figured he could build stuff on top of WordPress and he got started.

Then he said, “I can figure out how to create an order form. He messed around a little bit and he created an order form. Then he said, “I can figure out how to connect this order form with this service that will mail out, like physical mail,” whatever people who use the order form want–postcard, letter, whatever. It took him a while and he figured that freaking thing out. He had to create a secure website. He took a little while–actually, HostGator makes that easy. He said it’s just a checkbox. He figured that checkbox out and he did it.

Now he’s got a site. It’s just an experiment to see how to build a site for the first time. I asked him, “Did you get any customers?” expecting him to say, “I told you, Andrew, it’s just an experiment, back off.” He said, “No, actually people are using it.” Real estate people are using it to send letters out through his system to local potential customers.

Jason: That’s awesome.

Andrew: So that’s really good advice. If you’re listening to me and you just haven’t started, you can easily start by getting a HostGator package, just start making stuff, even if it’s really bad. You know who would love to see a really bad project? Me, Andrew, email it to me, Andrew@Mixergy.com. And if you have a really good project and you’re not loving your hosting company, move it to HostGator. Go to HostGator.com/Mixergy.

All right. Back to 37signals versus Basecamp–I always saw you guys as just having this clear philosophy on software development and you were going to apply it to lots of different software. When you moved on to just Basecamp, it made sense, but at the same time, I thought why didn’t that philosophy work for content management, why didn’t that philosophy work for employee engagement software. Why couldn’t you just set this philosophy on anything and have it grow to the sky?

Jason: Well, it did work. Things happen in different scales. So, Highrise is a wonderful business, multi-million dollar annual business. But Basecamp is much bigger than Highrise. Backpack–it think Backpack did a couple million bucks a year. It still does. They’re good businesses.

Andrew: Backpack is still around?

Jason: Everything is still around. Yeah, Backpack is still around. We don’t close anything. So, this is getting back to Basecamp 1, Basecamp 2, Basecamp 3. Backpack is still around for people who use Backpack. You can’t sign up for Backpack. But we don’t turn the lights off.

Andrew: You still do millions of dollars?

Jason: Of course.

Andrew: Wow. Okay.

Jason: It’s the same. I don’t actually know the exact number anymore. I haven’t looked at that number for a long, long time. At this point, it’s still doing over $1 million. There’s been attrition over the years because we’re not selling new versions. I don’t really know what he current number is. At the point, it was a very legit business.

So, the point is that there’s scale. Basecamp was our biggest hit by a significant margin. These other businesses were successful as well, very successful for especially a small team. Highrise, I think Nathan has five or six people working on it now.

Andrew: That’s it?

Jason: That’s it. Very profitable business because of that. It’s wonderful. A lot of companies out there would love to have Highrise’s numbers, trust me. But for us, we decided that we didn’t want to continue to become a very big company in terms of how many people work here. The software industry changed over the past few years, right? You can’t have a web app anymore. When we launched, we had a web app. Now you need a web app, you need iOS, you need Android, at the very least. Maybe you want a desktop app for Mac and maybe Windows. So, every product you have is like three products now.

So, when we had four, that’s like having 12. You’ve got to have a team to support all that infrastructure and all the product development. That would mean that you’d have to hire a ton of people. We could do that, we just don’t want to do that. We’ve made the conscious decision to say, “We want our company to be as small as possible.”

Unlike most companies that want to be as big as possible, we want to be as small as possible. We want to have the most profits and revenue as possible, but as far as the people, we want to keep the company as small as possible in terms of number of people who work here. So, with that comes tradeoffs.

So, we had to make the decision that that was more important to us than growing the business. We’d rather have everyone here focused on Basecamp versus spread out across a bunch of things that we couldn’t properly maintain over time because the burden became too large with a small team. We only have 12 programmers here and we have six designers.

So, we have a team of less than 20 who actually work on product. Most companies in our industry have 20 people working on the iOS app. We have 20 people working on the whole product–web, iOS, Android, desktop now. We just launched desktop Mac and desktop Windows, plus Rails, plus all the other open source products. We have a very small, highly productive team working on these things.

One of the reasons that we’re that productive is because we use Basecamp. We’ve built Basecamp to work for us. That’s all we’ve got. We couldn’t possibly actually run 12 products with the team like that. We just decided to put all of our eggs in one basket, which is typically what you don’t do in business, but what we did and say, “Let’s go all in on Basecamp and make it the best thing we could possibly do and go for that.” That was the decision.

Part of that was what do we do with the existing products? So, we were either going to sell them, spin them off or keep them running but in maintenance mode, not accepting new customers. We went through a process to sell Highrise first. We had about five interested parties or maybe a dozen interested parties. Finally, I think five finalists.

Ultimately, we didn’t like what came back numbers-wise People wanted the team. We didn’t want to give anyone away. So, we decided to spin it off into its own company. I won’t go further. We can talk about that if you’re interested. But we spun off into its own company. It’s a separate company which is owned by Basecamp, but it’s a separate company that’s run by somebody else.

Andrew: With Nathan owning a piece of it?

Jason: Nathan owns a piece of it. Also, we did the same thing with Know Your Company, which is another one of our products. Claire Lew runs that. Basecamp is a majority owner of that, but she owns a piece of it too and they’re both incentivized based on how well the company does to get more of the company over time. But they have their own functioning teams. Basecamp, me, David, none of us are involved on a day to day basis at all unless they want our advice and they’re running them entirely separately.

Andrew: I guess Highrise and Nathan I think about more because I’ve used Highrise and I’ve known Nathan for a long time. I’m wondering the product still looks very much like a 37signls/Basecamp product. How did you help shape the way he thinks about it so it doesn’t look a couple of years later like a drastically different company. It just looks more like a Basecamp business.

Jason: Well, it should look how he wants it to look because it’s his company. I think over time I would suspect that they will probably at some point down the road do a major redesign. Highrise looks the same as it did when it launched basically in 2007 for the most part. They’ve done an enormous amount of work on it over the past six months, eight months, a wonderful improvement.

The product has gotten significantly better over that time. The fundamental interface is very similar. Part of that is because it’s jarring to people to change things in a big way on them. So, I suspect that at some point down the road, they’ll do a major redesign. Maybe they’ll do a Highrise 2. Highrise 1 stays the way it is. I don’t know what their plans are and it’s not up to me at all. It’s entirely up to them.

So, we’ll see where they go with that. Lately they’ve been working within the existing design framework to add a lot of new features and they’ve added a ton of stuff. They’ve really inspired us because they’re a very small team and they’re moving really quickly. Every month they’ve got a huge handful of improvements that they’re launching, so, we’re trying to follow them. We’re doing six-week cycles versus one-month cycles. They’ve really taught us a thing or two about the power of small teams again.

Andrew: Did you infuse Nathan with any of your philosophy to get him to run the company the way that you’ve run your companies or did you pick him because he runs his business that way?

Jason: I’ve not tried to change Nathan at all and infuse anything into him. Nathan, I’ve always liked Nathan. Nathan and I have caught up over the years. Do you know his product, Draft?

Andrew: Yeah.

Jason: So, he asked me to help him with that early on. I worked with him on conceptually some feature ideas and some product direction and vision for it and stuff. So, we’ve been sort of working together a little bit over the years. I met him years ago when he was running Inkling. I just have a lot of respect for him. When we were looking for somebody to take over Highrise, there were a few people locally we considered and Nathan was one of them. It turned out that he was the right one.

So, that’s how that worked out. It’s not my job to tell him how to run the business. If it was my job to tell him how to run the business, I’d be running the business. So, it’s his job to run the business. We have a small board. It’s me, David and him and his wife, basically and that’s it. But every day to day thing, there’s no discussion with me about what Highrise should look like or what features it should have.

Andrew: Does he own more than 25% of the business?

Jason: I can’t say. If he wants to tell you what he owns, he can tell you that, but it’s not fair for me to tell you what he owns.

Andrew: I remember when you used to do office hours for a little bit talking to entrepreneurs, I wonder why you used to do it, specifically was it for customer development to understand what customers were going through or was it something else.

Jason: I was getting a lot of emails from people. I still get more than I’ve ever gotten, emails from people asking me about advice for this or advice for that or, “Will you mentor me?” or whatever it is. It became a bit of burden for me to try to respond to everybody thoroughly. I felt a responsibility to respond to everybody thoroughly.

Originally what I did was I had this idea where I would say, “I’d love to talk to you about this. I feel like in 15 minutes we can talk pretty deeply about some of this stuff, but I’m not going to get back to you via email anytime soon. I’m just too behind.

So, I have this thing, I think it was like Tuesdays and Thursdays between 1:00 and 3:00, “Call this number and if you can get through we can talk.” It was a way to offload some of the email responsibilities. It was also a way just to talk to people. I think one of the things I’ve learned is that the real value is in the follow up.

So, when someone asks me questions and I write an email back to them, basically they could write me an email again, but really, from that point on, the interactions go down very rapidly compared to a conversation, where I can say something, they can say something, they can ask why.

Like you, you’re really great at asking, “Well, tell me more about that.” You can get deep with follow up so you can have these face to face calls or voice to voice calls, basically. So, I thought that was really fun. At a certain point, I decided to stop doing it. I don’t know why that decision was. I think it was I went out of town and went off my schedule and didn’t pick it back up.

Andrew: I see.

Jason: One of the things we are doing now is we’re doing this series of workshops, Thursday will be our second one, called The Basecamp Way to Work. What we’ve been hearing from a lot of people is people just want to know how in the hell we do what we do. How do you guys work? How do you guys structure work?

Andrew: I get what’s in it for them. They want to do it. They pay to do it. I wonder what’s in it for you, a company that’s doing tens of millions of dollars. Why have people come in for thousands of dollars in revenue and spent so much of your time putting this together and teaching them? What’s in it for you at Basecamp?

Jason: For me, it’s market research and learning.

Andrew: Tell me how the market research and learning helps you. That’s what I assumed, but I don’t get it. How does it influence the way you think?

Jason: Sure. This workshop, for example, I’ll put our Basecamp up on the screen and walk everyone through every little piece of how we work together, from big projects to small projects to how teams use it to how we use it, whatever. What I’ll get is questions from the crowd, like, “That’s interesting. I didn’t think about breaking up work this way. I never thought about that before until you showed it to me.”

When I started hearing that more and more and more, I go, “Ah, we’re not explaining this well enough outside of this particular workshop.” So, what are some of the things I can take back to the mass market on our website or do tours or do guide videos or whatever it is? What are some of the things I can bring from the insights I get from talking to people in person?

Some of them are Basecamp customers, some of them are not. What I’m looking for also–it’s again, like a comedian. What are people laughing at? In this case, it’s like, “What are the aha moments? Where do people’s eyes light up?” Then they go, “Oh…” Then I’m realizing the ohs are not where I thought they would be.

So, then I’m like, “Ah, that is a big point for people. We should be talking more about that or we should be sharing more about that or we should be making this clearer. We’ve sort of taken for granted that we can work up in to-do lists and do it this way. But people don’t even know how to get started with that.

Andrew: This is a specific issue you noticed by having people come in to the office?

Jason: Absolutely.

Andrew: What do you mean by breaking up work? Is it to-dos having a separate section that they didn’t understand. What do you mean by that?

Jason: They don’t know how to break work up. So, let’s say you’re doing a project. Traditionally people might make a list called design and maybe a list called programming and maybe a list called whatever. They put on the design things and the design lists and all the programming things in the programming lists. In my opinion, that’s the wrong way to do it. What you want to do is you want to break things up into functional chunks.

Let’s say you’re redoing search results or something. You might want to have a chunk for returning message results. That would have both programming and design in the same list. So, when that list is checked off, you know that whole unit of work is done. If you have a list called design and a list called programming, you don’t know what’s done because you’re talking about roles versus work.

So, when I show how we organize work online or I show how we organize work in Basecamp to an audience, a physical, in person audience, light bulbs go off in people’s heads and they go, “I never thought about that.” In my head, I get the same, like, “Why would they have thought about that? Our product doesn’t do a good job of explaining that or we don’t help people break things up. We’re not helping. So, what can we do as product makers to help people through that process so they can have a better outcome?

So, as I sit and demo and take questions from the audience, I’m absorbing the things that resonate and the things that are confusing and the things that don’t make sense and the things that make a lot of sense. For example, one of the really interesting things is in Basecamp 3 in the docs and files section, you can make folders now. You can just drag a document into a folder. You can click it and drag it in. And it’s like the simplest thing. People have been doing this on computers for 30 years.

But when you do it in a web app like this, the audience goes crazy. They’re like, “Oh my god.” I’m thinking to myself, “You’re just moving a file into a folder.” But something is resonating there. When I see that energy, I go, “Maybe we should be talking about that more. Maybe we should be demoing that more. There are a thousand things we can show in the product. Maybe that’s one of them that we should be showing. So, that’s what this is about for me as well.

Also, last thing I’ll say about that–

Andrew: No, keep going. I love this.

Jason: I want people to be extremely successful with Basecamp. I want people to implement Basecamp with their company and go, “I don’t want to look back. I can’t believe how much better we are as a company. I can’t believe how much more we get done. I can’t believe how much calmer and more peaceful this place is now.”

So, part of what I’m doing here is I want to try and create amazing Basecamp companies by showing them every insider tip that we know about how we use Basecamp and showing them all the ways we use it to help them inspire them to have some ideas to bring them back to their own company or for them to sign up for Basecamp.

Some of them are just curious, like, “I’m thinking about this Basecamp thing. What can you do with it?” I just want to make sure everyone has a great outcome, a great experience and a great session so people go, “I never thought of using Basecamp for XYZ. I’ve only been using it for Y before.” That plus for to hear back from them and see where their eyes light up and get the follow up questions is very valuable.

Andrew: Fair to say, Jason, I’m looking at the demo Basecamp that you guys created, which I love. I didn’t know you guys did this. I’m looking at it. You’ve broken up the to-do list into newsletter updates and episode 10 and episode 11. Each one of them has an illustration checklist item. That’s the way you’ve learned talking to people in person is translated into a demo that helps your potential customers see how they should organize their business?

Jason: Yes. Although we’re not going for enough, right? You just picked up on that because we just talked about it, but if you’re seeing this for the first time, you wouldn’t get that. So, we need to go further. By the way, this sample Basecamp you’re looking at is actually a real Basecamp that we made internally to run our podcast called The Distance. So, we’ve just sort of turned it into a sample so people can look at it. This is exactly how we work. Every episode gets its own list. On that list are the things we need to do. Each one is assigned to somebody.

If you click on illustration one and you scroll down, you’ll see it started with a photograph and Jared sketched it out and then Annie said it looks great and sketched it out. This is all very real and showing how we work. Showing people this in person is very valuable for them. But I always want to hear the things people get stuck on or confused by or their eyes light up and they go, “Oh my god, that’s amazing.”

In the software business, everyone’s trying to do things that scale. We’re trying to make tutorial videos. I want to make those two, but you’ve got to start with the things that don’t scale. You’ve got to start with in person stuff for people, you can get to that energy and then you can transfer that energy to 100,000 or a million other people.

Andrew: What else do you do other than speaking to people in person at your office? Something that doesn’t scale that teaches you what your customers need?

Jason: So, I personally do demos for any customer who wants them. So, people email me. They want to know about Basecamp 3. I’m like, “Let’s setup a time and I’ll walk you through it for an hour.” We just jump on Skype and I’ll share my screen and I’ll do it.

Probably you could say that I shouldn’t be spending that time doing that. We should have someone else in the company doing that. But I lead the product here. I lead product development here, so I should be doing that. That’s where people ask follow up questions. That’s where people go, “Ah…” That’s where people go, “I don’t get it.” I need to hear those things so I know fundamentally what resonates and what doesn’t.

Andrew: What was the most influential thing that helped you learn how to create Basecamp 3?

Jason: Well, it’s always our behavior. So, we initially begin building our product for ourselves. We take into account thousands and thousands of pieces of feedback we have every month, really, but primarily every year. Some of those things make it in and some of those things don’t. But we’re always building the product that we think we need to do our best work together. Basecamp 3 is that product today. Four years ago, it was Basecamp 2.

We learned a lot about working together better. Basecamp 3 is the culmination of that thing. Our vision is always to build the best tool that we can for us and then help other people see what they can do to with it and then also take suggestions from other people as it gets rolling to improve the product in different areas. I feel like that’s the best way to do things.

I feel like whenever you use a product that’s built by somebody that uses the product they built, it’s very clear. There’s a level of detail and clarity that comes through in a product like that because they really cared about all the decisions. One of my favorite products in the world is something called Soundslice, which is by a guy named Adrian Holovaty. He’s a fellow Chicagoan.

Soundslice is a labor of love. I don’t use it because I am not reading sheet music or learning an instrument right at this moment. But I don’t have to, to appreciate how damn good this thing is. It is exceptional and it’s only exceptional because Adrian is a musician and he built this for himself. It’s so completely clear. It was not built from a spec that someone else told him. It was not built by him imagining what a student might need to learn music. It was like, “Here’s what I would need. Here’s what I want to exist in the world.” I feel like those are the best products there are.

Andrew: Though, I have to tell you, I’ve seen people in my audience how create things just for themselves. It’s so perfectly for themselves. And I don’t even get it. I don’t even know where to get started because it’s so much for them.

Jason: Right.

Andrew: I kind of feel like the difference is that you talk to these customers via customer service. Do you still do customer service?

Jason: Yeah. Everyone in the company does.

Andrew: So, you still do customer service emails, so you see where people are stuck and what they’re trying to do. You have phone calls where you’re screen sharing with them. I feel like it’s a combination of what works for you with a grounding that comes from talking to so many customers, so many users.

Jason: You need that. You also need to have a product mind because–that’s a little bit of an abstract idea. But building something just for yourself without thinking of other people, you’ll end up with something that’s very, very specific to you and that’s kind of what you’re talking about. You don’t get what someone else made. So, you still have to have an eye for what’s going to be clear to somebody else. What’s going to make sense to somebody else? How would someone else approach this? How would someone else understand this? You have to be that person too.

So, I feel like that’s the difference between making a tool and making a product. Making a tool is making something expressly for yourself. You’re fashioning a tool just for your own personal needs. Making a product is taking other people into consideration as well. It’s starting with an understanding of the problem because it’s your problem, but it’s also recognizing other people have to use this thing too, so you have to keep them in mind as you build.

Otherwise we wouldn’t have a tour. We wouldn’t have a guided tour. We wouldn’t have samples. I don’t need samples. I know what this thing is. We wouldn’t have explanations because I don’t need explanations. But you have to realize other people don’t. That’s the difference between a tool and a product.

Andrew: I feel like your design sense also comes from the way you recognize design in other things. I’m looking now at your Twitter account to see if you’re still doing it. You do, to some degree, still show images of things you love. There’s one here of beautifully painted Bronze texture on the Union Bank building in San Francisco. Who the freak else in the world would notice this thing? I live here and I don’t think I notice this.

Jason: I actually use Instagram for this mostly now. If you follow me on Instagram, I mostly post pictures of cars, watches, architecture, furniture–the things that I think are beautiful. So, I’m mostly using Instagram for that. Occasionally I’ll post something on Twitter as well.

I take inspiration. I don’t look to my own industry at all. I don’t read industry news and I don’t look at other people’s products for inspiration. I look outside of my industry. I think if you look at your own industry and your competitors, you end up more like them. That’s not where we want to be or who we are.

That building, that example, I love texture. So, seeing that and seeing the circles, it gives me ideas. It’s like circles are great. I like concentric circles. Maybe we’ll use that somewhere someday somehow. I don’t know. I love the color. I love the color of aged patinaed bronze. I love how it turns that green, bluish color. That’s a beautiful color. Maybe that color will make its way into Basecamp in different ways.

The reason why Basecamp’s menus–when you pull them down, Basecamp 3’s menus are purple is because I have a purple sweater that I really like. You’re wearing a purple shirt. I love the color purple. I just felt like purple was just a warm, happy color. So, that didn’t come from because someone else was using–everyone else’s product right now is like a black sidebar and it’s very black. Basecamp is very colorful and comforting and very warm.

That’s something that I get from furniture design and I get from being in a home that’s comfortable and a living room that’s comfortable and seeing someone’s home, not like walking through a museum where everything is black and white and stark and glass and delicate and you don’t want to touch it but more of a cozy environment. So, that comes from paying attention to my environment. That’s where my inspirations come from, just being aware.

Andrew: I see that. I’m looking at it now on the screen. The menus are purple. Take ten seconds to complete your profile is purple. One last thing that I noticed looking at your Twitter account, just looking to see if you’re still pointing to things you think are interesting. February 22nd, you said, “Just a reminder, Basecamp is 100% free for teachers, including home schoolers.” You used to specifically say no free accounts. If you’re in nonprofit, you still have to pay. What happened there?

Jason: That’s a great one. We have a nonprofit discount, 25%. But with teachers–I have some friends who are teachers. I have been talking to them more and more. I was kind of shocked–I know a lot of people know about this, I didn’t know about this until fairly recently–that a lot of teachers come out of their own pockets to buy supplies for their classrooms.

Andrew: Really?

Jason: Yeah, blew my mind. I couldn’t believe it. They’re coming out of their own pockets to buy pens and paper and books sometimes and general office supplies are the teacher’s responsibility.

Andrew: That’s awful. I had no idea.

Jason: It is. It’s awful.

Andrew: That’s like you saying people have to buy a computer to come work in your office.

Jason: Yeah. It’s awful. Right. And teachers don’t get paid very well. A lot of teachers use Basecamp. I’m like if I can help that, you should not have to pay for Basecamp. If you have to pay for pens and paper, that’s way more important. I’d rather you spend your money on that.

So, we just decided to give Basecamp away to teachers, who many of them aren’t paid well. They’re doing really important work and they’re coming out of pocket already for basics. That’s why decided to do that as a call we made one day like, “This should be free for teachers.” So, we just made it free for teachers.

Then a lot of people started writing us about home school. Originally we said it’s for teachers in a classroom. Over the years we’ve had a few people here who homeschool their kids. We have at least one family here who works for us now. Maybe two, but one at least I know. They homeschool. People are writing in about homeschoolers. I said of course, home school teachers and parents get it free as well.

Look, it’s fine. We can afford to do that and I hope it helps people. That’s why do that.

Andrew: I really want to be fair with your time. But do you have like three more minutes?

Jason: Yeah, of course.

Andrew: I was going to announce this at the end of the interview. Then I thought let me ask you for your feedback on this. These guys called The Better Bunch decided that Mixergy needs an app. So, they designed it with some feedback from our developer and from me. It’s up here and I was going to say to the audience for the first time, here’s what they designed. Can you give us some feedback?

But let me ask you–can you go over to Mixergy.com/BetterBunch and see what they did. I’d just love to hear you talk it through. I feel like it’s kind of going to change the way people perceive this now because they’re going to hear your thought.

Jason: One thing that I think is important, by the way, is this is actually a good topic because in order to critique a design or critique a product–I don’t mean that in a critical way. I mean in more of an academic, critique way–I really need to understand what I’m looking back. It’s very easy to look at something and go, “I don’t lie that. I don’t like that.” And you’re just looking on the surface. I will play this video, but I can’t guarantee that I can be helpful here. But let me play this.

Andrew: It’s not a video. It’s like an interactive mockup.

Jason: Oh, okay. So, I’d be logging in. First of all, let me actually reload this. The first question I would have is I’m not a Mixergy member, currently. So, if I download this app because I heard about it and I’m presented with this, there’s no incentive for me. I can’t use it, first of all. There’s no way to sign up. We had this same problem with Basecamp. There’s no way to sign up and I don’t know what I’m looking at. I don’t know why I should become a member. If I wanted to become a member, I wouldn’t know how.

Andrew: We’re thinking of using this just for members at first.

Jason: How would they get it? In the App Store, right?

Andrew: We were thinking as soon as they buy, we say, “Here’s a link to go and get it from the App Store.” But you’re right. What happens if someone discovers it in the App Store themselves by just looking for Mixergy. It doesn’t say, “This is for premium members.”

Jason: And they will. People watch your show. They’ll look up Mixergy and they’ll download an app and they’ll think it’s a collection of all the interviews and they’ll be like, “I can’t…” So, what will happen on the App Store is you’ll get a bunch of one-star reviews. That feels like shit. It’s a bummer.

So, all you need to do here is explain what this is about. So, rather than saying, “This is for members only.” You can still say this is for members only, but you can have a button like, “Tell me what I get with a membership,” and it would send you to the site or pull up a sheet where they can look at something. Let me sign in though.

Andrew: I’m writing notes here as you’re saying it.

Jason: “Mixergy is where the ambitious learn from a mix of mentors. I’m Andrew Warner. In my 20s…” Got it. First of all, I like the personal message as an introduction. This is not something I’ve seen anyone else do. I’m a big fan of direct communication like this. One question I would have at this point is do people already know this? If they’re already members, do they already know this? So, do you need to do this again? I still like it because there’s a quick button at the bottom, “Show me episodes.” Let me just go into that.

So, I’m in the episodes now, got most recent. So, these are all audio or video also? What are they?

Andrew: We’re focusing on audio and intentionally hiding the video because we think people are going to prefer listening with this.

Jason: Got it.

Andrew: You can still stream the video.

Jason: Now, again, this is where it comes to I’m not a customer of yours at the moment. I don’t know what I’m looking at. Your customers might though. This is what’s important about getting design feedback. I may not know the lay of the land, but to your customer, this might be completely obvious. One thing I would say is do you call them courses on the web.

Andrew: Yeah.

Jason: So, master course, like that language is all familiar to them?

Andrew: Yeah. I think so.

Jason: I’m seeing some of these say view course and some of these say one percent. Is that because you’ve watched one percent of it so far?

Andrew: Yeah.

Jason: One bit of feedback on that, small detail is when I see one percent next to a volume indicator, I’m thinking to myself it’s one percent audio or something. It’s not like I’ve watched one percent of this.

Andrew: Right. I see. They were going for one percent has been listened to, but that looks like a volume indicator.

Jason: Yeah. That’s nitpicking, but it’s not necessarily clear. For example, a pie chart or something that would represent completion or play would communicate a little bit more to me. Let me go back for a second. This is a small little detail around mockups. I clicked on the first one. Actually, it looks like I didn’t click on any of them. So, I go in here and it’s an interview and I can download it or I can play it, stream video.

From what I can tell at a high level, it seems all straightforward. What I wonder about is, is all useful? Like all is mixing together it seems like everything. What does all mean? How are these sorted? What am I actually looking at is a question I would have here? How would I know what order this stuff is in or why these three are at the top, for example?

Andrew: I see. Right.

Jason: So, what does all mean? I assume it means everything. Then for example, if I came and loaded the app once a week and came to all, would I always see the same all because they’re alphabetically ordered A to Z or is this like ordered by what’s newest?

Andrew: By what’s newest.

Jason: But you might want to call it what’s new or newest versus all. All is the implementation detail that it actually is all. But I don’t necessarily know–if it said newest and I came here, I would know the order in my head was like newest to oldest. When I see all, I don’t know what I’m looking at. You understand what I’m saying?

Andrew: Yeah.

Jason: It’s a minor thing, but it’s one of those things to help people orient themselves. How many things are all? Do you have hundreds? What do you have? How many?

Andrew: Over a thousand together.

Jason: Right. All doesn’t make any sense, actually.

Andrew: No one would want all of them anyway, is what you’re saying.

Jason: You can’t find them. In a scrolling list like this, you can’t possibly find them. I might consider having new and then at the bottom of the new, maybe just show the last ten things, the newest ten or maybe it’s called like, “Latest Ten” or something I can wrap my head around what it is. So, call it like newest ten or latest ten and then at the bottom, you can say, “Show me all,” then if you say, “Show me all,” I’d show how they’re grouped and I’d have a way to search through them.

Andrew: Yeah. That is an issue now that we started tagging them, there is no tag on this.

Jason: Anyway, that’s a small detail. Let me go to interviews. Interviews are with people–I would have pictures of the people and the names of the people. When I think about an interview, I don’t think about the topic of the interview. I think about the person who’s being interviewed.

Andrew: Right. When you click it, you do see their name and their company name and so on. You’re right. All you see is the headline when you’re looking at the list of interviews.

Jason: And imagine going through this list and seeing one that said Gary Vaynerchuk, you would click that one because it said, “Oh, Gary, boom.” But if it was just like, “How to Use Social Media in an Exciting Way,” you know what I mean? You would go by it because you’re looking for names. I’d play up the names way more than I would play up the topics. You could have both here. But I definitely do that. I like the time. I think it’s good to have the time. Let me go to the courses one. What is a course? Can you tell me about that?

Andrew: A course is where someone teaches a specific topic. Right now you and I have been riffing on lots of different topics. In a course, we dive in and teach that thing beginning to end.

Jason: Are you giving them all or different teachers?

Andrew: Different people are teaching it.

Jason: Would somebody who’s a member recognize the teacher’s name?

Andrew: Actually, yeah. We should include that in there.

Jason: If you have names that can be attached to things, I would include names. It’s another thing people can identify with and pick up on. One thing I’m seeing here–and this is just from the screenshot–but I can’t tell which course–I would think about separating them into courses I’ve gone through and ones I haven’t done yet. I can see there’s a percentage. But if you hit 100 percent, does it go away, does it stick around? What actually happens to things I’ve looked at?

Andrew: How do you see the ones you’ve completed?

Jason: Yeah or how do I hide the ones I’ve completed? The other thing I would suggest to you in general–this is getting sort of into some of the Basecamp discussions we’ve had, which is like someone is coming here and they want to know what to do first. I would suggest having like the top five courses first or your five best or whatever it is. Have something that someone can bite a chunk out of it and feel good about it versus going through this and seeing 1,000 or 500 or 50 or whatever it is and not knowing which one to pick first.

Andrew: I see.

Jason: Help them make the choice to pick something first. Now, they might pick the one on the top, but if you had a separate section which is like, especially first time users, “if you’re new, we recommend these three first.” Then you’re helping someone get going.

Andrew: I can almost see if we’re categorizing everything on that home screen under all or interviews or courses that maybe a for you tab would sit next to interviews and courses instead of all so if you’re starting new, it will say here are the five that you should start with. If you listen to those five, we say here is a next section for you. I see what you’re saying. Now that I think about it, you wouldn’t necessarily need all together. Why would you need to see interviews and courses grouped together? It’s not that useful.

Jason: I agree. The other thing is it’s natural because when you’re building software, you can return all. It’s something you tend to do. I would also think about help people make choices. If someone has a list of 500 things, how do they know what to pick first? You want them to pick something.

One suggestion would be top five or we recommend these three or have Andrew’s picks or something on some of them or something that just gives them a place to start and feel like they’re starting in the right place versus feeling like, “I don’t know where to start and I’m picking the wrong thing.” So, thinking about comfort and helping guide someone through the process.

If you had a day with somebody and you had one day and you said “I’ve only got one day to teach you five things. Here’s what they would be…” That’s a good exercise for you. You could make those the things, perhaps. Something like that. I think that would be valuable.

Andrew: If you look at the–

Jason: One last thing—

Andrew: Yeah, please.

Jason: It would be kind of cool to see what other people are listening to right now. What other courses–do you know people’s locations?

Andrew: This is just a mockup, so we could see something to know their locations. But it would be cool to see, “Someone in Canada just listened to How to Overcome Burnout.” You can even get more specific, “Someone in Rome just listened to How to Overcome Burnout. Somebody in Sydney, Australia just listened to…”

This idea that you can show the broad reach of Mixergy in that way if that’s true can be kind of a cool social component to helping people feel like this is alive and active and other people are doing this too. Again, making people feel comfortable doing this.

Andrew: There’s one other thing I wanted to point you to. On the very bottom, it looks like it’s really small now that I look at it with you. Above the home button on the iPhone in the mockup is what looks like a bookmark, but that’s our collections where we sort of interviews and courses based on topic. I realized we’ve just kind of crammed that into the bottom of the screen and that’s a really helpful thing to start off with.

Jason: Exactly. Mixergy Picks–this is what I would start with or something like this. I don’t know exactly what these are. But conceptually, if you’ve got thousands, narrow it down to five for me. Help me out here. What do I pick? Mixergy Picks seems like a good place to start or if it’s called like Andrew’s Top Five or whatever you want to do. Some suggestion to get me going I think would be very valuable.

I’ve also noticed that I’m not sure if this is intentional or not, but when you click on that bookmarking kind of icon, the icon on the left then changes to a play icon or something. One the previous screen, I don’t know if it was a mockup mistake, but I’m not sure what that means.

Andrew: Why doesn’t it stay the same? The bottom two icons aren’t very clear.

Jason: But I think helping people get started–whenever you have a thousand of something, pick three for them, pick five for them. I think that may be very valuable. This is tough because when you give feedback like this, I don’t actually know what I should be looking at because I’m not a user of this. So, everything I’ve said is a little more surface level because that’s all I can go on. I do think helping people make choices in general is a good idea. People want to know what to do.

Andrew: You’re right. They do tell us that all the time, but when it came to creating this mockup for the mobile app, I forgot about that and instead I focused on the issue that they came to us with, which is, “I want to download the program at home and listen to it in my car on the way to work without killing my internet usage. I want to save the ones that I like for later.” Those things are really important. That’s for people who have now discovered what they want to listen to. What happens for the people who haven’t?

Jason: Right. Also, what you just said, I don’t see any functionality on here that says, “Listen later.” You just said they want to download stuff for later. I know there’s a download thing. But one of the great things you can do with software design is to match language. So, if customers are writing you in going, “I want to listen to this later. I want to download this for the car or for my ride home.” If you can have options that speak directly to that language, you can really connect with people. This thing is awesome.

One of the things you could do–this is just an early idea, right? When someone launches the app for the first time or logs in, you might ask them when do you like to listen to Mixergy. People are like “On the ride home at work,” or late at night or whatever. Whatever they pick there, that could end up being the name of the button for later. So, if someone’s like, “I listened to Mixergy on my commute home,” you can save this for the commute home.

Andrew: Right.

Jason: And it’s like, “Ah, that is badass. No other product has a button that says, ‘Save it for my commute home.'” Or it’s like, “Save this for the weekend.” Further, you might even be able to offer all of those options for people. They all do the same thing, but then they’re marked differently. So, you can save one for the weekend or you can save one for your commute home if you want to make the choice about when you might want to listen to it. There might be some things there. I don’t know. It’s just a quick riff. I don’t know if it will go anywhere.

Q But I like the way you’re thinking. How do they experience this? Use that back in presenting the material.

Jason: Exactly. I think in general that’s how you really make a product that feels like someone is like, “Wow, this product gets me. I listen to this thing on my commute home and there’s a button like listen on the commute home. Nothing else has that. They totally get me.” So, those are the things. I think little details like that go a long way. They’re small. They’re not the most important thing you can do. But it might be a nice touch.

Andrew: I like those little touches. I really like this we did this. I hope it worked well for the audience. I know it helped me a lot to hear you go through this. This is the first time I’ve ever done it. I remember Noah Kagan coming back from an event that you did where he flew to Chicago and said, “One of the greatest things I saw was Jason giving specific feedback about somebody’s site.” I thought, “I’ve got to go for it now. Let’s see what happens.”

Jason: I love doing that. That’s fun. Something else we could do another show which could be interesting for you is I can just screen share our Basecamp account and show you how we actually work. It’s like a workshop I’m doing on Thursday, but in an hour, go through all these little things that we do and how we designed the product, actually take you through the whole thing detail by detail and go into extreme depth on that.

Andrew: I think it would be if it went beyond–not just me. We’d use GoToWebinar so we can share the screen with a lot of people and get their feedback. I’d do that if we can make it more than just about Basecamp so we can see your organization philosophy. I only want to see Basecamp, but I want to take away from it ideas that even if I’m not using any project management software I can apply.

Jason: Absolutely. We do everything in Basecamp. So, to me, Basecamp just holds the things. So, I would use to explain the ideas.

Andrew: Right just like you did earlier.

Jason: So, I’d go into one of our Basecamps, “For example, here’s an example pitch. Let’s look at this together. Here’s how we pitch ideas. Here’s how we follow up on those pitches. Here’s how we re-pitch and idea later.” It just so happens that it’s stored in Basecamp because that’s where it is. But its’ not about Basecamp. You can do that in any tool you want, of course. It’s not a sales thing for Basecamp, but that’s how all our stuff lives.

Here’s how we break up work. Here’s how we decide which questions to ask every Friday. Here’s how we decide when you chat. This is actually a huge topic, like when do I chat? When do I write up a message? When do I comment on something? Here’s how we approach communication in internally because there are very different methods and means to get your point across. Depending on what you pick, you can get more or less traction. Traction is a really important topic in companies. This is actually something I’ve been meaning to write about, but this idea of traction.

Andrew: You mean when someone has an idea in the company, traction for that idea and getting people to sign on.

Jason: Yeah, how do you get traction for an idea? The way you communicate it and where you communicate it and how you communicate it has a lot to do with it. Thinking those decisions through about, “Where should I talk about this? How should I talk about this?” is a really important dimension to getting your point across and being persuasive at some level.

It’s not just about how you say it. It’s about where you say it, the method in which you say it. I try to end mine usually with, “Any thoughts?” That’s how I usually try to end my pitches because I don’t want this to seem like a declaration. This is not a declaration. It’s an idea for discussion. The more discussion you get on your idea, the more traction your idea has because you get people involved and now other people are involved. So, little techniques like that. That could be a fun a show sometimes.

Andrew: I’d totally be into it. I want to do it. Anyone who’s listening to me, let me know if you want to be a part of it. I guess we’ll schedule it with you offline.

Jason: Thanks again, man. This was great.

Andrew: I love it. And congratulations on Basecamp 3. People can see it now, Basecamp.com.

Jason: Finally.

Andrew: I’m really appreciative to The Better Bunch for saying, “Andrew, you should create a mobile app. Let us help you do it.” They were so great to work with. They kept taking all of our customer ideas into this mockup. If you need them to create a mockup for you or a mobile app, they’re there. They’re called Better Bunch. You can see their stuff by going to Mixergy.com/BetterBunch.

And two more links–I told you guys if you needed a hosting company, go check out HostGator.com/Mixergy. And if you’re having trouble doing your books or you want someone else to do it so you can spend more time on your business, go to Bench.co/Mixergy. I’m grateful to them and to you, Jason. Thanks.

Jason: Thanks again, Andrew. Always a pleasure.

Andrew: I love it. Thank you all for being a part of it. Bye.

Jason: See you around.